Question 1

The certificate of interest acts the same as a(n)________ issued by a corporation.

Accepted Answer

A) promissory note 
B) stock certificate 
C) deposit note 
D) initial public offer 
A) promissory note 
B) stock certificate 
C) deposit note 
D) initial public offer

Question 2

A member or a shareholder is the owner of an LLC.

Accepted Answer

A) True 
 B)False

Question 3

An LLC organized in the United States is considered a domestic LLC throughout the United States.

Accepted Answer

A) True 
 B)False

Question 4

Philip and Deborah form an LLC.Philip contributes $50, 000 capital, and Deborah contributes $75, 000 capital.They do not have an agreement as to how profits are to be shared.If the LLC makes $100, 000 profit in its first year, how will the profit be divided among the members?

Accepted Answer

A) Philip gets $30, 000 and Deborah gets $70, 000. 
B) Philip gets $50, 000 and Deborah gets $50, 000. 
C) Philip gets $25, 000 and Deborah gets $75, 000. 
D) Philip gets $35, 000 and Deborah gets $65, 000. 
A) Philip gets $30, 000 and Deborah gets $70, 000. 
B) Philip gets $50, 000 and Deborah gets $50, 000. 
C) Philip gets $25, 000 and Deborah gets $75, 000. 
D) Philip gets $35, 000 and Deborah gets $65, 000.

Question 5

A member's obligation to contribute capital is excused by the member's death.

Accepted Answer

A) True 
 B)False

Question 6

An LLC that was organized in Alabama and operating in Texas with no operations outside the U.S.is considered a ________ in Texas.

Accepted Answer

A) foreign limited liability company 
B) limited liability partnership 
C) domestic limited liability company 
D) general partnership 
A) foreign limited liability company 
B) limited liability partnership 
C) domestic limited liability company 
D) general partnership

Question 7

Which of the following methods are used to appoint a manager of a manager-managed LLC?

Accepted Answer

A) appointed by the secretary of state 
B) vote of majority of the members 
C) unanimous vote of members 
D) unanimous vote of shareholders 
A) appointed by the secretary of state 
B) vote of majority of the members 
C) unanimous vote of members 
D) unanimous vote of shareholders

Question 8

An operating agreement is a document that states the terms for converting an existing business to an LLC.

Accepted Answer

A) True 
 B)False

Question 9

Sam Muller and Toby Richardson organize an LLC in the state of Delaware.In the articles of organization, they specify the duration of the LLC as "25 years from the date of filing the articles of organization." Which of the following true in this context?

Accepted Answer

A) The LLC is invalid, as it does not specify a date of termination. 
B) The LLC may be dissolved at will any time after 25 years from the date of filing the articles of organization. 
C) Muller and Richardson have organized a valid term LLC. 
D) Muller and Richardson have organized an at-will LLC. 
A) The LLC is invalid, as it does not specify a date of termination. 
B) The LLC may be dissolved at will any time after 25 years from the date of filing the articles of organization. 
C) Muller and Richardson have organized a valid term LLC. 
D) Muller and Richardson have organized an at-will LLC.

Question 10

An LLC is taxed at the entity level.

Accepted Answer

A) True 
 B)False

Question 11

A limited liability partnership has no general partner.

Accepted Answer

A) True 
 B)False

Question 12

A member of a manager-managed LLC who is not a manager owes no fiduciary duty of loyalty or care to the LLC or its other members.

Accepted Answer

A) True 
 B)False

Question 13

A(n)________ LLC has no specified term of duration.

Accepted Answer

A) short-form 
B) general 
C) term 
D) at-will 
A) short-form 
B) general 
C) term 
D) at-will

Question 14

The ULLCA is federal law and is valid across the United States.

Accepted Answer

A) True 
 B)False

Question 15

LLCs are treated as artificial persons who can sue or be sued, enter into and enforce contracts.

Accepted Answer

A) True 
 B)False

Question 16

A limited liability company is an incorporated business entity.

Accepted Answer

A) True 
 B)False

Question 17

Distinguish between rightful and wrongful disassociation from an LLC.What are the consequences of disassociation?

Accepted Answer

Unless an LLC's operating agreement prov

Question 18

Which of the following best defines the term distributional interest?

Accepted Answer

A) the ratio in which profit is distributed among members of an LLC 
B) the process of distributing profits or losses according the capital investment of the member 
C) the constitution of management of the LLC based on the extent of each member's financial investment 
D) a member's ownership interest in an LLC that entitles the member to receive distributions of money and property from the LLC 
A) the ratio in which profit is distributed among members of an LLC 
B) the process of distributing profits or losses according the capital investment of the member 
C) the constitution of management of the LLC based on the extent of each member's financial investment 
D) a member's ownership interest in an LLC that entitles the member to receive distributions of money and property from the LLC

Question 19

Which of the following is true of an LLC?

Accepted Answer

A) An LLC is a creature of federal law. 
B) An LLC is regarded a separate legal entity. 
C) An LLC cannot hold title to property. 
D) The owners of LLC are called general partners or specific partners. 
A) An LLC is a creature of federal law. 
B) An LLC is regarded a separate legal entity. 
C) An LLC cannot hold title to property. 
D) The owners of LLC are called general partners or specific partners.

Question 20

A member's ownership interest in an LLC is called a ________.

Accepted Answer

A) certificate of interest 
B) distributional interest 
C) collateral interest 
D) creditor's interest 
A) certificate of interest 
B) distributional interest 
C) collateral interest 
D) creditor's interest

Exam 39: Limited Liability Companies and Limited Liability Partnerships

The certificate of interest acts the same as a(n)________ issued by a corporation.

A member or a shareholder is the owner of an LLC.

An LLC organized in the United States is considered a domestic LLC throughout the United States.

Philip and Deborah form an LLC.Philip contributes $50, 000 capital, and Deborah contributes $75, 000 capital.They do not have an agreement as to how profits are to be shared.If the LLC makes $100, 000 profit in its first year, how will the profit be divided among the members?

A member's obligation to contribute capital is excused by the member's death.

An LLC that was organized in Alabama and operating in Texas with no operations outside the U.S.is considered a ________ in Texas.

Which of the following methods are used to appoint a manager of a manager-managed LLC?

An operating agreement is a document that states the terms for converting an existing business to an LLC.

Sam Muller and Toby Richardson organize an LLC in the state of Delaware.In the articles of organization, they specify the duration of the LLC as "25 years from the date of filing the articles of organization." Which of the following true in this context?

An LLC is taxed at the entity level.

A limited liability partnership has no general partner.

A member of a manager-managed LLC who is not a manager owes no fiduciary duty of loyalty or care to the LLC or its other members.

A(n)________ LLC has no specified term of duration.

The ULLCA is federal law and is valid across the United States.

LLCs are treated as artificial persons who can sue or be sued, enter into and enforce contracts.

A limited liability company is an incorporated business entity.

Distinguish between rightful and wrongful disassociation from an LLC.What are the consequences of disassociation?

Which of the following best defines the term distributional interest?

Which of the following is true of an LLC?

A member's ownership interest in an LLC is called a ________.

Legal Heritage and the Digital Age

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Constitutional Law for Business and E-Commerce

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Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

E-Commerce and Digital Law

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

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